Equities Still on the Ropes as U.S. Observes MLK Day

January 18, 2016

U.S. markets will be closed in observance of Martin Luther King Jr.’s 87th birthday.

Share prices in the Pacific Rim fell 1.4% in Singapore, 1.1% in Japan, New Zealand and India, 1.0% in Hong Kong and 0.7% in Australia. The stock markets in Greece, Italy and Spain show losses thus far today of 5.8%, 1.6% and 0.3%, but those of Germany, France and the U.K. are up 0.2-0.3%.

Ten-year sovereign debt yields increased two basis points in Great Britain and one basis point in Germany but edged a basis point lower in Japan.

A mixed dollar shows declines of 0.3% versus the Aussie dollar and sterling, 0.2% relative to the loonie, and 0.1% vis-a-vis the kiwi but gains of 0.3% against the yen and 0.2% relative to the euro and Swiss franc. The Chinese yuan recovered modestly.

West Texas Intermediate oil is trading below $30 at $29.57 per barrel. Comex gold has edged up 0.2% to $1,090.46 per ounce.

Japan’s tertiary index of service sector activity fell 0.8% in November, narrowing its 12-month increase from 1.4% in October to 1.3%. The average tertiary index in October/November was 0.2% above the 3Q level, nonetheless.

Revised Japanese industrial output data show a 0.9% on-month drop in November after October’s 1.4% increase. Production exceeded its year-earlier level by 1.7%. The inventory-to-shipments ratio jumped 2.9% on month but fell 1.8% on year. Both capacity and capacity usage edged down 0.1% on month.

Japanese department store sales were 0.1% higher in December than a year earlier following a 2.7% on-year decline recorded in November. Japan needs sustained stronger consumer spending in 2016 to make good progress on its inflation target.

Chinese property prices posted a 1.6% year-on-year rise in December, which was better than the 0.9% rise in November, but the same number of cities (21 out of 70) reported property price increases.

Expected inflation in Australia of 2.0% last month and around 1.7% in the final quarter of 2015 remained subdued and well below the middle of the central bank inflation target of 2-3%.

New motor vehicle sales in Australia fell 0.5% last month, shrinking the 12-month advance to 2.2% from 6.0% recorded in November.

The British Rightmove house price index recorded the first monthly rise in three months, climbing 0.5% in January. The index was 6.5% above the January 2015 level.

India’s trade deficit widened to a 4-month high of $11.664 billion in December. This was 23% greater than a year earlier on a much larger drop in exports than imports.

Czech producer prices fell by a greater-than-forecast 2.9% in the year to December and 3.2% on average in all of 2015.

Italy’s trade surplus widened nearly 30% between November 2014 and November 2015 on faster growth in exports than imports over the period.

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